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Invoice Discounting

Invoice discounting is considered by many to be the ‘holy grail’ of the invoice finance world. It is typically the most cost effective invoice finance solution and it allows you to stay in control of your customer base.

Invoice discounting releases up to 90% of the value of your gross outstanding invoices. This cash provides valuable working capital to allow you to pay suppliers and employees without having to worry about your customers paying you late.

There are numerous lenders offering invoice discounting and each has it’s own criteria and ways of operating the facility. The challenge you face as a business owner and the service that we offer is ensuring that you find an invoice discounting lender that is suited to your requirement and structure a facility that will genuinely work for your business.

Invoice Discounting Criteria

The criteria for invoice discounting can differ dramatically from lender to lender. There are however some basic criteria:

  • You should be selling to other businesses
  • On credit terms
  • Raising your invoices in arrears of delivery

These criteria are the same as invoice factoring. However, invoice discounting also attracts some additional criteria.

Lenders will want to know that your business has the capabilities to collect in the outstanding invoices effectively. That means you should have a dedication person looking after the credit control. The credit control should also have a robust process that issues month end statements and overdue letters along with personal contact to ensure invoices are paid on time.

Many invoice discounting providers also have financial criteria surrounding minimum turnover levels, profitability and net worth. This differs dramatically within the invoice discounting market so it is important you approach the right lenders. This is where Smart Factoring Quotes can assist. Our in-depth market knowledge allows us to recommend lenders that are actively seeking businesses like yours. This ensures you have a genuine partner that wants your business to succeed.

If you have any further questions regarding invoiuce discounting, try our invoice diiscounting FAQs page for more information.

Benefits of Invoice Discounting

Invoice discounting's biggest benefit is that it releases cash into your business but let’s look at the benefits in more detail:

  • It releases up to 90% of the value of your unpaid invoices meaning that you can smooth your cash flow without worrying about customers not paying invoices on time.
  • This allows you to forecast with more certainty.
  • Invoice discounting allows you to do the credit control meaning that you are in total control of your customer base.
  • It is typically a confidential form of finance meaning that your customers are unaware of any lenders involvement.
  • Invoice discounting is typically the cheapest for of invoice finance as it does not include any additional services such as credit control.
  • If required you can include bad debt protection that will protect your business against the risk of bad debts.

At Smart Factoring Quotes we are experts in sourcing and structuring invoice discounting facilities for businesses just like yours. We ensure that there are no restrictions on the funding which means that cash flow is maximised. We also focus on total costs ensuring that you obtain the most cost effective solution for your business.

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